Benefit of Monetary Limits Guidelines Not Applicable In Dispute related to Classification of Product for Customs Duty: Delhi HC [Read Order]

The Delhi High Court has held that the benefit of monetary limits guidelines is not applicable in disputes relating to the product classification for customs duty.

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Gourishankar Polymer Industries, the petitioner/assessee has challenged the order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench at New Delhi. The customs department has contended that though the monetary limit is below Rs.50,00,000/-, the classification of the product would be a recurring and a legal issue and hence in terms of exception in Clause 2(c) of the ‘Instruction’ dated 2nd November 2011, the issue deserves to be considered.

It is submitted by Mr. Aakarsh Srivastava, ld. Standing Counsel for the Respondent that though the monetary limit is below Rs.50,00,000/-, the classification of the product would be a recurring and a legal issue and hencein terms of exception in Clause 2(c) of the‘Instruction’ dated 2nd November 2011, the issue deserves to be considered.

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The said clause in the Instruction states that “ Adverse judgments relating to the following should be contested irrespective of the amount involved:

a)         Where the constitutional validity of the provisions of an Act or Rule is under challenge;

b)         Where Notification/ Instruction/ Order or

Circular has been held illegal or ultra vires;

c)         Classification and refund issues which are oflegal and/ or recurring nature.”

Counsel for the Petitioner relies upon the order dated 14th November 2024 in Customs Appeal passed by CESTAT, Chennai wherein the same product was involved i.e., PVC Resin Grade SP 660 (Suspension Grade) and the CESTAT, Chennai had refused to entertain the matter and had disposed it on the ground of monetary value. The relevant portion of the said order reads as under:

“Order dictated in court. Revenue appeals are dismissed on the ground of monetary limits as per Litigation Policy.”

Considering the fact that the same product is involved even in the order passed by CESTAT, Chennai and the classification of this product for the period prior to 2017 has not been settled, the  Court deems it appropriate to remand the matter to CESTAT, Principal Bench, New Delhi for a fresh adjudication on the classification issue itself and not to dispose of the matter on merely the monetary limit.

The division bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta remanded the matter to Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi for a fresh adjudication on the classification issue itself and not to dispose of the matter on merely the monetary limit. The court held that this is an old matter, CESTAT, Principal Bench, New Delhi shall dispose of the matter within three months.

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To Read the full text of the Order CLICK HERE

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